Dr Jouko Huju of GMBA Finland talks about customer relations management in the marine industry.
The average marine dealer even globally is a small company. They have limited resources for marketing in terms of personnel and funding. In the past years the competition has taken new forms. The digital world has changed the ways of marketing in its various forms totally. The customers can easily and in a short period of time get comparing offers for the same boat or engine. Customer relations management, especially managing customer knowledge and customer accessibility, can generate new revenue for a marine dealer. If nothing is done about this, there is a growing possibility of a rapidly increasing number of dealers going out of business.
There is an increasing recognition of the importance of managing customer relationships. Marketing has moved from a brand-centered focus to a customer-centered approach. The ability to acquire, manage, and model customer information is the key to sustaining a competitive advantage
The primary motivation for a firm to implement CRM applications is to track customer behaviour and to gain insight into customer tastes and evolving needs. Customer relationship management applications facilitate organizational learning about customers by enabling firms to analyze purchase behaviour across transactions through different channels and customer touch points.
Firms with greater deployment of CRM applications are in a better position to leverage their stock of accumulated knowledge and experience into customer support processes. In addition, firms with a greater deployment of CRM applications are likely to be more familiar with the data management issues involved in initiating, maintaining, and terminating a customer relationship. This familiarity gives firms a competitive advantage in leveraging their collection of customer data to customize offerings and respond to customer needs.
CRM is a strategic approach that is concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments. CRM unites the potential of relationship marketing strategies and IT to create profitable, long-term relationships with customers and other key stakeholders.
CRM provides enhanced opportunities to use data and information to both understand customers and co create value with them. This requires a cross-functional integration of processes, people, operations, and marketing capabilities that is enabled through information, technology, and applications. CRM is a strategic tool to create another competitive advantage.
On the other hand one needs to understand that it is not always easy for a small dealer to break away from the daily, cash bringing routines for any business development activity. This is one of the main reasons behind this research. The small member companies need someone to produce options for solving this crucial problem.
CRM is a process that addresses all aspects of identifying customers, creating customer knowledge, building customer relationships, and shaping their perceptions of the organisation and its products. In general one can say that more attention should be paid to the customer and the goal should be to get to know the customer better, develop a relationship with him or her. We should not only be interested in closing a deal and that the relationship should cover more than just the moment of closing the deal.
Producing data which helps a dealer to know his customers better is a key competitive advantage. Especially in the case of the rapidly changing marine business, retaining customers by better CRM will in the very near future be an important competitive advantage and a key to future success.
It is important to gain an understanding which components or competencies CRM is generally composed of. The four cornerstones of CRM are:
- Customer knowledge
- Relationship strategy
- The individual value proposition
Knowledge of the individual customer is essential in order, ultimately to develop a long-term relationship and to supply customisation. The individual customer information must be used to develop a longlasting customer-supplier relationship. In other words, a marketing or other type of strategy must be implemented which truly differs from a strategy which merely focuses on stimulation of transactions.
Communication may, on the surface, seem to be a simple task, yet every customer who recalls experiences with suppliers will quickly arrive at the conclusion that the quality of conversation remains somewhat basic. This leads to the conclusion that many companies have no experience in carrying on a dialogue of any substance. This becomes even more complicated when multichannel communication environment is involved. An organisation that takes the initiative to get to know an individual customer, to develop a relationship with him or her, and to carry on a dialogue cannot avoid also offering these customers an individual proposition.
There are four process selection criteria of CRM. First a small set that addresses tasks critical to the achievement of the organisation’s goals. Second, each process should contribute to a value creation process. Third, each process should be at a strategic or macro level. Fourth, the processes need to manifest clear interrelationships. These cornerstones are very often totally missing from the scope of a marine dealer’s marketing plan or customer data management.
Customer knowledge relies on the quality of customer data. Incomplete, inaccurate, outdated data will not help us to understand the customer. The quality of relationship data becomes apparent to the supplier from the response it receives to a marketing campaign. The customer database is of good quality if it corresponds to current reality. Further the data needs to be complete, correct and unique. The set-up and maintenance of a database with customer data requires spending and investment. It is necessary for companies to become aware of which expenses must be incurred in order to collect, register and keep data up to date. It is just too easy to register everything that we run across only to find out that ultimately just a small portion of collected data has some value.
Integrated customer knowledge eliminates the unintentional overlap that leads to redundant sales efforts or serial communications among multiple departments. In addition, integrated customer knowledge can better synchronize product development to customer requirements and simplify customer-facing processes. Handling data improperly leads to only a portion of data’s potential value being realised or to a situation where the value of the data is nullified. There is a potential danger that data investments are not incorporated as an essential part of a company’s strategy. Another big challenge for the companies is the insufficient knowledge of available data and the manner in which it can be converted into useful information. The contents of data keep changing in a rapid pace and in many cased the superfluous data are not deleted but still require continuous attention.
Optimal knowledge management means segmenting information before analysis. Failure to do so will prevent us from extrapolating knowledge on specific clusters of customers. Through segmentation we are able to classify and categorise customers based on certain features which will help us better serve the customers. For instance, segmenting customers by their income levels will lead to a richer analysis of predictive buying behaviour than simply grouping all customers together.
Communication may make a contribution to the “customisation” of the customer contact and relationship management. It can provide us with better customer profile that can assist us in being of better service to the customer. One practical problem is to combine data from different sources. Traditionally the databases’ strength lies in their ability to supply behavioural data and in term of market research, their suitability is to provide data on customer as a user. The information obtained during personal contact with the customer serves to further improve the profile. Turning the information into knowledge requires integrating customer data across the enterprise, from the billing to the shipping department, to provide panoramic views of their requirements and activities. Decision support and other business intelligence tools are used to analyze information in order to highlight emerging trends, uncover potential problems, and give customers independent insights.
It is essential that customer profiles are developed by customer types and that marketing and communication efforts are tuned accordingly. At least the following data must be collected:
- Name, address, city, telephone and e-mail
- To which segment of the business does the customer belong
- Communication channel preferences (customer preferences)
- Transaction history and customer value (what has he bought and when)
- Communication history. A communication history is important e.g. to avoid irritating repetition
I believe that the above findings call for an extensive educational project. The competition for customers in the marine business is very hard. It is not only just one marine dealer against another. There is a fierce competition for the consumers’ leisure investments and the marine business has to fight against mobile homes, summer houses, travel, motorcycles and many more. As already mentioned when defining the purpose of the assignment, the average size of a marine dealer is very small. They do not have the resources or capacity to develop their business from all possible aspects. Developing ways and knowledge of how to target marketing communications in a more cost-effective way is now a key factor for many to stay in business. Companies/associations would need to start the planning process with a professional CRM training company.
However, it is important that the process is not too long, too costly or too time consuming. Again, a small business is too tied up in the daily routines to be able to spend too much time or travel too far for any training. The stress must be on making the dealers informed about the importance of customer specific approach and the importance of analysed, segmented customer knowledge. They must also learn how to communicate in a customer specified way and at regular intervals. The big challenge will be to get the dealers committed to another somewhat time-consuming project. A clear advantage in a more personalised training is that it will eventually lead quicker to the development of personal relationships with key customers in a dealer’s own region.
Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA